Hiring the right talent in China to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in China yet. Our PEO and EOR service can be the solution for your company.
Recruitment can be a tricky business, especially when a company is venturing into unfamiliar countries and exploring new markets. This is the perfect occasion to bring in a specialist to oversee the process for you.
Bradford Jacobs’ benchmark platforms as a Professional Employer Organization (PEO) have worldwide reach and include a total understanding of the challenging complexity and potential of the Chinese economy and employment market. You can trust Bradford Jacobs to put the brightest talent in place for your company.
Our comprehensive knowledge of all Chinese employment sectors and understanding of the culture and customs guarantee an untroubled transition. Look through our guide to familiarize yourself with everything an employer needs to know about the recruitment process in China.
The Recruitment Process in China
Foreign companies recruiting in China to expand their operations will encounter significant differences with their experience of hiring in other countries. For example, contracts must be put in place by a legal entity in the country or China’s Labor Law may not apply. As a result, regulations tend to push companies towards forming a subsidiary, typically a Wholly Foreign-Owned Enterprise (WFOE) as a limited liability company.
Ahead of the recruitment process, bear in mind:
- April-May is a good time to source candidates, after any annual bonuses have been paid
- Check the candidate is not held to a ‘no competition’ clause by their previous employer
- International recruitment agencies cannot hire to fill temporary positions
Recruitment is the first stage of making your company operational and competitive in China. It is vital to know where to locate the finest talent to be a perfect fit for your company’s expansion plans.
Foreign companies opening a legal entity subsidiary must follow strict procedures to register and onboard employees.
- Before registering, select a unique company name and designate a finance officer
- Decide on a business structure, with Wholly Foreign-Owned Enterprises being the typical choice
- Obtain approval from the Ministry of Commerce and State Administration of Industry and Commerce, to receive a business license. Branch offices, which remain wholly owned by the parent company, need not register with the Ministry of Commerce
- Registering with the State Taxation Administration (STA)
- Registering with the local Social Insurance Bureau and Housing Fund Bureau to activate accounts for your employees
- Registering employees’ contracts with the tax and social security authorities
- Open a business bank account
- If employing foreigners, accounts need to be registered with the Services System for Foreigners Working in China along with applications for Foreigner’s Work Permit and the Notification Letter prior to employees applying for their work visa
Additional requirements are necessary to put your new recruit on the payroll, including:
- Advising on creating employment contracts
- Investigating for special expatriate status and researching any tax-free allowances or double tax treaties
- Reconciling federal, provincial, territorial, and municipal taxes to assess for refunds or extra payments
- Calculating employees’ monthly salary payments
- Creating payment schedules for wages, issuing pay slips, and remitting taxes and social security payments to the authorities
- Filing annual employee tax returns between March 1 and June 30 of the following year, in Chinese and with accounts in local currency, the yuan
- Completing personal income tax returns for employees, if required
Legal Checks you can make on Employees in China
Scope: Questions that can be asked during interviews are in theory governed by the Civil Code, but in practice are rather vague. However, some definite restrictions apply to female applicants, who cannot be asked about marriage or pregnancy status, with fines of up to 50,000 yuan (€6,768, US$7,814) for breaches.
China has strict protocols on where information is obtained regarding individuals’ privacy and data, although these have not been brought together under a single code and this can lead to difficulties for employers.
But there are also helpful resources. The Ministry of Education’s national database allows employers to check higher education qualifications at the China Higher Education Student Information and Career Center (CHESICC) website.
References: Prospective employers should have applicant’s written consent before contacting a previous employer.
Criminal Record: If verification is necessary for a particular role, only the candidate should apply for a Non-Criminal Record Certificate. If the employer asks an agency to obtain the information this could violate privacy laws.
Discrimination: At neither interview stage nor employment itself can employees be discriminated against on grounds of ethnicity, religious beliefs, or gender.
Recommended: Check the applicant has required visas, permits to live, and work in China.
Basic Facts on Hiring in China
Hiring staff for expansion into China involves compliance with a strictly regulated framework of employment laws and regulations that apply at federal level, but which may vary in different provinces, territories, and municipal administrations.
Companies stretching their global reach into China must conform to basic requirements on hiring, including:
- Employers must provide a written contract for full-time employees within one month of their first day at work
- Contracts should be in Chinese and, if necessary, translated into a foreign language by officially accredited translators
- Contract types can be open-ended / indefinite; fixed term with an agreed end date; tied to a specific project
- The contract must contain details of the employee’s ID, home address
- Basic terms of employment should cover location and role responsibilities, rights and working conditions, details of compensation, severance and disciplinary procedures, any provision for probationary periods
- Employer and employee should have copies of the contract and agree any amendments in writing
After hiring and onboarding, employers must be aware of other considerations:
Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination. But these minimums have added complications in China as they can vary between provinces, territories, and municipal administrative areas.
To hire employees, companies must follow strict procedures to set up a legal entity in China to run their own payroll. These include:
- The employer or agent must register the employee with the Social Security Bureau and local Housing Fund
- Registering with the State Taxation Administration
- Applying any special expatriate status and research tax free allowances – note taxation laws on allowances for foreigners will change after January 2022
- Calculating monthly salary and creating pay slips
- Submitting wage tax returns and social insurance registration
- Corresponding with involved parties
- Creating annual accounts and year-end statements
- Creating payment schedules for wage tax, social insurances, and net wages
- Payroll records must be kept for at least five years
Working with a Recruitment Agency in China
Many international recruitment agencies in China look to place candidates in the most popular high-end sectors such as biotechnology, automotive industry, medicine, logistics, new materials research, environmental energy, and management.
International recruitment agencies cannot hire to fill temporary positions.
At the state level, the Chinese Government introduced the “High-end Foreign Experts Recruitment Plan” in 2019 through the Ministry of Science and Technology, with the aim of attracting high-level foreign experts in key priority fields such as science and technology, innovation, and development.
What are the Benefits of Hiring Outsourcing for China?
A major benefit of outsourcing recruitment in China is that it streamlines international expansion by opening potential new markets efficiently, speedily, and cost-effectively. Outsourcing allows companies to focus on planning and managing their new venture.
Advantages for the parent company include:
- A wide-ranging talent search undertaken by a Professional Employer Organization (PEO) with reduced recruitment costs
- Control over capital expenditure, as outsourcing removes the initial need to establish premises for a subsidiary
- Reduce risks with an ‘easy in, easy out’ operation while exploring fresh markets in the Far East and Pacific Rim
- Quickly start new projects
- Focus on core business
- Improve flexibility
- Scale the global workforce to fit the pace of expansion
Do not leap into the Unknown!
At Bradford Jacobs, our Employer of Record (EOR) services take care of employee recruitment, onboarding, payroll, compliance and providing ongoing support. We choose the best-qualified talent to fill the roles you need. Our expansion know-how guarantees you comply with all China’s payroll regulations, including salaries, tax, and social insurance by the time your new employees are sitting at their desks.
We ensure you are ready for every eventuality. To get started on your recruitment expansion in China, contact us today.